The sides met for more than 15 hours Friday to try to save the season. The lockout was in its 149th day.
The handshake deal, however, still must be ratified by both owners and players. A majority on each side is needed to approve the agreement.
"We've reached a tentative understanding that is subject to a variety of approvals and very complex machinations, but we're optimistic that will all come to pass and that the NBA season will begin Dec. 25," Commissioner David Stern said.
The Christmas Day deadline created a sense of urgency because that schedule is traditionally a showcase for the league.
If there aren't any scheduling changes, the 2011-12 season will open with the Boston Celtics at New York Knicks, followed by Miami at Dallas in an NBA finals rematch, plus MVP Derrick Rose leading Chicago into Los Angeles to face Kobe Bryant and the Lakers.
Neither side provided many specifics about the deal, and there are still legal hurdles that must be cleared before gymnasiums are open again.
"We thought it was in both of our interest to try to reach a resolution and save the game," union executive director Billy Hunter said.
The league is planning on a 66-game season and aims to open training camps Dec. 9, with free agency opening at the same time. Stern has said it would take about 30 days from an agreement to playing the first game.
Owners locked out the players July 1, and the sides spent most of the summer and fall battling over the division of revenues and other changes owners wanted in a new collective bargaining agreement. They said they lost hundreds of millions of dollars in each year of the former deal, ratified in 2005, and they wanted a system where the big-market teams wouldn't have the ability to outspend their smaller counterparts.
Players fought against those changes, not wanting to see any teams taken out of the market when they became free agents.
The Associated Press contributed to this story.